September 1, 2006

 

CBOT Corn Outlook on Friday: 1/2-1 cent lower, following overnight theme

 

 

Corn futures are expected to begin daytime trading 1/2-1c lower Friday, following the tone established overnight and ahead of the long weekend, sources said.

 

In overnight e-CBOT trading, September corn fell 1 cent to US$2.31 per bushel and December slipped 1/4 cent to US$2.47 3/4 with e-CBOT December volume of 4,117 contracts.

 

The market is facing a long weekend which could limit buying interest and some participants could even up some of their positions after the recent price strength, a floor analyst said.

 

However, there are some concerns that corn yields will not increase much from earlier projections which could provide underlying support for prices, he added.

 

A lot depends on what the funds want to do, a commission house broker said. If the funds want to continue their recent buying, the market will go up, if not the market will probably have a hard time moving in either direction.

 

Commodity fund buying was estimated at 7,500 contracts Thursday.

 

With the long weekend ahead it may be difficult to move much from Thursday's price levels, he added.

 

On technical charts, the bulls have fresh upside technical momentum to suggest a near term low is in place in the corn market, a market technician said. First resistance for December corn is seen at US$2.48 1/4 and then at US$2.50. First support is pegged at US$2.45 and then at US$2.43, Thursday's low.

 

Deliveries posted against September totaled 2,613 contracts. Large issuers included the customer account of Man Financial, which issued 721 contracts, and the customer account of FC Stone, which issued 309 contracts. Large stoppers included the house account of Shatkin, which stopped 685 contracts and the customer account of the USA Trading Division of Man Financial, which stopped 641 contracts.

 

Corn basis bids were mixed Friday. Peoria, Illinois was up 4 1/2 cents at 1 cent under the September future.

 

In other corn news, China's corn consumption is expected to increase substantially over the coming years on strong demand from the industrial sector although feed demand may stagnate.

 

China's current processing capacity of 50 million metric tonnes of corn is expected to increase to 70 million tonnes in 2006 and reach 85 million tonnes in 2007, according to the China National Grains & Oils Information Center, a major government-backed think tank.

 

CNGOIC has estimated that Chin's corn crop will reach 142 million tonnes in 2006-07, up from 139.4 million in 2005-06. Much of this is consumed by the feed sector leaving insufficient quantities of corn to the emerging processing sector, analysts said.

 

Taiwan's Major Feed Industry Group, MFIG bought 60,000 metric tonnes of U.S.-origin corn from Marubeni in a tender concluded Thursday.

 

Two South Korean feed-buying groups and a private agro-products company bought a total of 165,000 metric tonnes of corn, traders in Seoul said Friday.

 

Korea Feed Association bought 55,000 tonnes of optional origin corn from Cargill.

 

Separately, Major Feedmill Group bought 55,000 tonnes of optional origin corn from Toepher and private company Agribrands Purina purchased 55,000 tonnes of U.S. corn. The seller's identity was not named.

 

Corn futures on China's Dalian Commodities exchange settled mostly higher with May 2007 up RMB/8 at RMB/1,402 per tonne.

 

Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitment of traders report for the period ending Aug. 29.